Volkswagen ID.3 Forum

Posted: **Sat Apr 17, 2021 9:24 am**

Being offered a PCP deal with contribution to deposit. I'm told I can pay this off any time. I would have paid cash if it were not for the contribution. Don't want interest charges as have money sitting in bank.

Anybody on here successfully bought on VW PCP and then paid off finance without losing out?

Posted: **Sat Apr 17, 2021 9:37 am**

Yes. Took the PCP, took the £2000 deposit contribution, paid off the PCP.

Pay it off within 14 days and there's no interest to pay.

Posted: **Sat Apr 17, 2021 10:12 am**

Thanks, Digital.
Sorry if I seem a bit thick but I'm confused by things like how they might calculate settlement figures and whether the car's value drops once bought and does that have any bearing on the settlement figure.
Any further reassurances would be a great help to me.

Posted: **Sat Apr 17, 2021 12:06 pm**

I took the PCP when the deposit contribution was £2500. Initially I struggled to get through to VWFS by phone /email but eventually got sorted and paid of the balance in full, though had £12.40 interest to pay (went over the 14 day period through no fault of mine ) . Always take advantage of deposit contributions.

Posted: **Sat Apr 17, 2021 1:23 pm**

Thanks Kaygee. That's quite reassuring.

Posted: **Sat Apr 17, 2021 3:13 pm**

Done this a few times as a cash buyer, perfectly legal. By EU law (and UK law), companies aren't allowed to make a car cheaper to buy via finance to encourage you into debt. Deposit contributions are the weaselly way around it. As part of the ways around it, they can't reclaim their "gift".

Simplest way of looking at it is to say you're buying a £30k car with a £15k final guaranteed value (GFV) after 3 years. You put a £3k deposit down, leaving £27k.

Let's say for simplicity sake that there's a deposit contribution of £2k. That leaves you with £25k to pay back, but you're really paying £10k off over 3 years plus interest on £25k to leave you with your GFV to pay at the end.

You have a 14 day cooling off period for your finance, day 1 is the day after you collect your car and finance kicks in. For each day before you phone the finance company up and exercise your right to withdraw from the finance, you'll pay a nominal amount of interest e.g. 1/365 x your APR rate. On a £25k debt at 6% APR, it's about £3.50 a day. As soon as you've made that call to VWFS to withdraw, there's no more interest added and you'll get a settlement amount, which'll be £25k plus £3.50ish per day. You'll have 30 days to settle.

Perfectly legal but VWFS don't like you doing it and neither do the dealership as they'll be expecting a slice of finance commission that they now won't be getting. So don't tell the dealership of your intentions.

Posted: **Sat Apr 17, 2021 4:11 pm**

Folkramfer wrote: ↑Sat Apr 17, 2021 10:12 am Thanks, Digital.
Sorry if I seem a bit thick but I'm confused by things like how they might calculate settlement figures and whether the car's value drops once bought and does that have any bearing on the settlement figure.
Any further reassurances would be a great help to me.

The settlement figure is dependent on how much you borrowed and when you ask them for it. The sooner the better!

Posted: **Sat Apr 17, 2021 8:45 pm**

monkeyhanger wrote: ↑Sat Apr 17, 2021 3:13 pm Done this a few times as a cash buyer, perfectly legal. By EU law (and UK law), companies aren't allowed to make a car cheaper to buy via finance to encourage you into debt. Deposit contributions are the weaselly way around it. As part of the ways around it, they can't reclaim their "gift".

Simplest way of looking at it is to say you're buying a £30k car with a £15k final guaranteed value (GFV) after 3 years. You put a £3k deposit down, leaving £27k.

Let's say for simplicity sake that there's a deposit contribution of £2k. That leaves you with £25k to pay back, but you're really paying £10k off over 3 years plus interest on £25k to leave you with your GFV to pay at the end.

You have a 14 day cooling off period for your finance, day 1 is the day after you collect your car and finance kicks in. For each day before you phone the finance company up and exercise your right to withdraw from the finance, you'll pay a nominal amount of interest e.g. 1/365 x your APR rate. On a £25k debt at 6% APR, it's about £3.50 a day. As soon as you've made that call to VWFS to withdraw, there's no more interest added and you'll get a settlement amount, which'll be £25k plus £3.50ish per day. You'll have 30 days to settle.

Perfectly legal but VWFS don't like you doing it and neither do the dealership as they'll be expecting a slice of finance commission that they now won't be getting. So don't tell the dealership of your intentions.

That's not only extremely comprehensive, it's also very simple to understand. Thank you.

I hinted to my dealer that I might want to cash in quickly and he said to not do it straight away as it might affect benefits such as free servicing. Funny, I've not seen or heard anything mentioned in this deal about free servicing, though I've seen it mentioned in other vw posts. I suppose he's just trying to delay me a bit so the can still get their commission.

Posted: **Sun Apr 18, 2021 7:52 am**

As far as I'm aware, there's no free servicing with an ID3. There isn't even a service pack you can buy (servicing after 2 years, I believe, presumably VW haven't decided how much to charge yet).

If you keep finance beyond 14 days, your settlement will include 2 months penalty, around £300 total and the dealership will get their commission. If you settle within 14 days they won't get their commission.

Posted: **Sun Apr 18, 2021 8:58 am**

I got a service plan for 2 services with my 1st Edition, didn’t pay any extra for it, car on PCP with VWFS.

Posted: **Sun Apr 18, 2021 9:06 am**

scott28tt wrote: ↑Sun Apr 18, 2021 8:58 am I got a service plan for 2 services with my 1st Edition, didn’t pay any extra for it, car on PCP with VWFS.

Looks like some do, some don't. Or it's a limited time offer. Was your service plan through vw finance or vw dealership?

Posted: **Sun Apr 18, 2021 10:13 am**

Folkramfer wrote: ↑Sun Apr 18, 2021 9:06 am
scott28tt wrote: ↑Sun Apr 18, 2021 8:58 am I got a service plan for 2 services with my 1st Edition, didn’t pay any extra for it, car on PCP with VWFS.
Looks like some do, some don't. Or it's a limited time offer. Was your service plan through vw finance or vw dealership?

VWFS.

Posted: **Sun Apr 18, 2021 11:48 am**

It was probably limited offer applicable to the 1st edition only. Can't find any service information, let alone a service pack you can buy or get free on the VW website currently. Regardless, a free service pack comes under the same principle as deposit contribution. I bought a 10 month old Audi A4 that came with free service pack (2 services) last June (the ID3 is replacing it). I settled finance 2 days after I got the car, and I used the first free service 6 weeks ago.

They can't take a finance incentivised gift from you, whether it be deposit contribution, service pack or anything else. My A4 came with a service agreement contract that didn't disappear when I backed from the finance.

Posted: **Sun Apr 18, 2021 1:11 pm**

Thanks all. Looks like we're going ahead.

Posted: **Tue Apr 20, 2021 5:25 pm**

I bought mine with a deposit contribution from VW Financial Services. I checked before signing up that I would be able to settle the finance early and it's no problem and fully legit. The dealership asked me as a courtesy to them not to settle within the first six months, though. So my six months are almost up, and I'll be settling the finance next month, and saving about £3,700 in interest charges by doing so.

I imagine the dealership lose out if you settle too early.

Posted: **Tue Apr 20, 2021 6:26 pm**

HeidiFlowerpt Driver wrote: ↑Tue Apr 20, 2021 5:25 pm I bought mine with a deposit contribution from VW Financial Services. I checked before signing up that I would be able to settle the finance early and it's no problem and fully legit. The dealership asked me as a courtesy to them not to settle within the first six months, though. So my six months are almost up, and I'll be settling the finance next month, and saving about £3,700 in interest charges by doing so.

I imagine the dealership lose out if you settle too early.

I'm not too sure but it sounds like it would cost you 6 months interest, which could well be about £1500.

My dealer has been good to me so I want to be fair, but not that much.
Anybody put me right on this?

Posted: **Wed Apr 21, 2021 2:24 am**

Folkramfer wrote: ↑Tue Apr 20, 2021 6:26 pm I'm not too sure but it sounds like it would cost you 6 months interest, which could well be about £1500.

Yes I've paid interest, but I've done the sums and it amounts to £810. I knew I would pay some interest, but as it happens it suited me to effectively delay buying the car outright by six months.

Posted: **Wed Apr 21, 2021 4:17 pm**

Wish you all the best. Enjoy your purchase.

Posted: **Wed Apr 21, 2021 7:21 pm**

Folkramfer wrote: ↑Tue Apr 20, 2021 6:26 pm
HeidiFlowerpt Driver wrote: ↑Tue Apr 20, 2021 5:25 pm I bought mine with a deposit contribution from VW Financial Services. I checked before signing up that I would be able to settle the finance early and it's no problem and fully legit. The dealership asked me as a courtesy to them not to settle within the first six months, though. So my six months are almost up, and I'll be settling the finance next month, and saving about £3,700 in interest charges by doing so.

I imagine the dealership lose out if you settle too early.
I'm not too sure but it sounds like it would cost you 6 months interest, which could well be about £1500.

My dealer has been good to me so I want to be fair, but not that much.
Anybody put me right on this?

The dealership get a payment from VWFS (about £750, I believe) if you take out finance and keep it beyond the cooling off period.

If you weren't taking out finance anyway, it's a payment the dealership wouldn't get. It's just icing on the cake for them. If you wait 6 months, you'll be paying 8 months interest because whatever point you call time on your loan, there's an extra 2 months "notice" interest to pay. I personally wouldn't sacrifice more than half of my £1750 bung to give the dealership a bigger slice. I've got my money in the bank and I'll be withdrawing from my finance the day after I get the car to pocket the lot. If you're going to do this, don't tell the salesperson and get their back up!

£810 seems cheap for 8 months interest especially 8 months at the start of the period where you've cleared less capital and have a larger amount of monthly interest in those early months. I'd estimate £1200-1300.interest paid to grab £1750, not much an incentive left if you didn't need to defer.

Have you just taken the total amount of interest, divided it by the number of months in your term and multiplied it by 6? If so, you're way off with your estimate and you'll have benefitted very little from that deposit contribution.

Posted: **Thu Apr 22, 2021 9:27 am**

Thanks Hartlepooler. Although I don't wish to deprive the dealer, I suppose I'll be settling up as early as is possible. After all the hassle we've had being without a car for 4 months, we deserve every penny.

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